BUS FPX 4013 Assessment 5 Business Theories

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Capella University

BUS-FPX4013 Organizational Structure, Learning, and Performance

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Business Theories and Amazon’s Strategic Alignment

Business theories provide frameworks for understanding market dynamics, competition, innovation, and organizational culture. Often, when a company faces failure, the problem lies not in the actions themselves but in how those actions fail to align with changing market realities. Companies may continue to follow outdated assumptions, making it difficult for them to adapt to shifts in the marketplace. The theory of business revolves around three primary components:

1. Marketplace Defines Reality

Successful businesses understand the importance of adapting to market shifts. They must anticipate not only what customers are willing to pay for today but also what they might pay for in the future. Being able to predict market trends is crucial to a company’s survival and growth.

2. Focus and Alignment with Reality

Achieving focus means aligning the organization’s operations with the ever-changing marketplace. Few companies have the power to shape reality, but companies like Amazon have managed to evolve with the market, maintaining their competitive edge by adjusting to consumer needs and technological advancements.

3. Skills and Competencies for Long-Term Survival

Once a company understands the required changes, it must focus on developing the necessary skills and competencies to ensure long-term success. Businesses need to continually review and revise their business theories to stay relevant and competitive.

Amazon: Organizational Structure and Strategy Alignment

Amazon offers an example of a company that aligns its organizational structure with its strategy. The company’s expansive control over global e-commerce operations reflects a dynamic structure that supports its growing market reach. As Amazon expands its product offerings, its structure evolves to complement both the operational and technological aspects of the business.

The company has successfully integrated strategic flexibility within its corporate structure, allowing for rapid adaptation to market demands. Amazon’s ability to quickly research and adapt to market trends contributes to its dominance as the largest e-commerce retailer. This adaptability highlights the necessity of aligning organizational structure with business strategy. If a company changes its strategy, the structure must evolve to support it. Organizational structure is not only about how a company is organized but also about how it utilizes its resources to achieve strategic objectives.

Milgrom and Roberts (1995) discuss the importance of ensuring that organizational structure supports strategy through continuous learning and change management. In competitive environments, businesses must remain agile and responsive to both internal and external factors.

BUS FPX 4013 Assessment 5 Business Theories

SWOT Analysis of Amazon’s Performance

To assess Amazon’s market position, a SWOT analysis reveals both strengths and areas for improvement.

SWOT Category	Details
Strengths	Amazon boasts a strong brand value and customer-centric approach. It has cost leadership due to its online-only retail model, avoiding the overhead costs associated with physical stores. The company’s strategic alliances and innovative offerings, such as drone delivery services, help differentiate it from competitors.
Weaknesses	Despite its strengths, Amazon faces challenges such as the imitation of its business model by competitors and losses incurred from offering free shipping. Additionally, product failures, negative publicity, and issues with worker conditions have damaged its reputation.
Opportunities	Amazon can expand its in-house brand, Amazon Basics, and improve efforts to combat counterfeit sales. Expanding in emerging markets, offering more subscription services, and opening physical stores abroad could further enhance growth.
Threats	Regulatory issues, increasing competition, and threats from counterfeit products and fake reviews pose significant risks. Amazon must also address concerns related to supply chain and labor practices to avoid reputational damage.

Recommendations for Enhancing Industry Performance

Based on the SWOT analysis, the following recommendations are proposed for Amazon:

1. Enhance Marketing and Product Offerings

Amazon should invest in unique marketing strategies and expand its product offerings to maintain its competitive advantage.

2. Resolve Tax and Reputation Issues

To mitigate negative publicity, Amazon should resolve its tax controversies and engage in more transparent communications regarding its labor practices.

3. Expand Internationally

Expanding its global presence, especially in emerging markets, will help Amazon capture new opportunities and reduce competitive pressure in existing markets.

4. Combat Counterfeit Sales

Amazon should implement advanced technological measures to combat counterfeit products and protect consumer trust.

5. Address Worker Concerns

Amazon should address its labor practices openly and work toward improving conditions for its workforce.

Business Mindsets and Organizational Performance

Amazon’s success can also be attributed to its adoption of certain thinking habits, which play a significant role in organizational performance. These include:

1. Connected Seeing

Amazon has integrated technology to understand the entire customer experience. The company’s ability to analyze customer behavior and anticipate future needs has contributed to its innovation and growth.

2. Collaborative Teamwork

Amazon promotes a culture of collaboration. The company’s approach to inviting third-party sellers and fostering a spirit of teamwork across various departments has driven its success.

3. Courageous Action

In times of uncertainty, such as during the COVID-19 pandemic, Amazon took bold actions by expanding its workforce and enhancing its delivery systems. This courage allowed the company to capitalize on market opportunities while others were faltering.

Redesigning Organizations for Higher Performance

To further enhance performance, Amazon could focus on refining its logistics and supply chain operations. Adapting its business model to emphasize efficient, global logistics will help strengthen customer loyalty and streamline global operations. Expanding beyond retail and reinforcing its leadership in cloud services will allow Amazon to diversify and continue its competitive advantage. By staying focused on its core competencies and maintaining flexibility, Amazon is well-positioned to remain a leader in global e-commerce.

References

Milgrom, P., & Roberts, J. (1995). Complementarities and appropriate strategy, structure, and organizational change in manufacturing. Journal of Accounting & Economics, 19(2-3), 179–208. https://doi.org/10.1016/0165-4101(94)00382-F

Ambroise, L., Prim-Allaz, I., Teyssier, C., & Peillon, S. (2018). The environment-strategy-structure fit and performance of industrial servitized SMEs. International Journal of Service Industry Management, 29(2), 301–328. https://doi.org/10.1108/JOSM-10-2016-0276

Aleksić, A., & Jelavić, S. R. (2017). Testing for strategy-structure fit and its importance for performance. Management: Journal of Contemporary Management Issues, 22(1), 85–102.

Pauline Meyer (2019, February 16). Structure Characteristics (An Analysis). www.Pnamore.com